Couche-Tard deploys $55 million in funding for ‘the future of convenience’

The retailer is investing in delivery, AI and lottery app startups.

Alimentation Couche-Tard Inc--McGill University and AlimentationConvenience channels have moved on from the slushies and beef jerkies of yore, and Alimentation Couche-Tard is looking to the future of the retail format with a sizeable investment.

The convenience retail giant is investing $55 million – or just over half of its $100 million Circle K Venture Fund, established in 2020 – into startups geared around boosting the shopping experience and responding to evolving consumer needs.

Circle K Venture Fund’s most recent equity stake investments include Food Rocket and Farmstead, both U.S.-based companies it’s running pilot projects with, offering delivery of grocery, convenience and pantry items at competitive prices and and “compelling speed,” according to the company.

The latest investment is meant to “to change the very nature of convenience,” according to Claude Tessier, Couche-Tard’s, CFO.

Convenience has changed a lot already: Chief rival 7-Eleven, which has been making overtures to flexitarians through recent partnerships, and announced the launch of the exclusive 7NOW delivery app in Canada last summer, allowing customers to order a variety of their favorite convenience store snacking items and to do it quickly.

Other investments made since its inception are Pensa Systems – which develops retail-focused AI and computer vision, a key component of automatic checkout-style concepts – and Jackpocket, the first licensed-third party app in the U.S. to offer official state lottery tickets.

Jason Dubroy, SVP, commerce and experience at Mosaic, tells strategy that convenience stores sell time, and that more convenience typically means a bigger basket. 

He says Couche-Tard could even invest in a grocery chain, or in the food space more broadly, following the lead of Shoppers Drug Mart, for example, which took fresh food to an urban environment through its Loblaw partnership. This, he says, is allowing its stores to play a more centralized role in the community, and this includes delivery.

Besides, he says, the format as a place to go for milk and cigarettes really hasn’t changed in decades and is ripe for innovation.

Alimentation Couche-Tard’s McGill University lab partnership, a live testing ground for innovative and frictionless technologies” is meant to address challenges of C-Channel. One of these could include staffing, as Dubroy notes that the “great resignation” means it’s getting harder to get people to work retail, this is especially the case with round-the-clock establishments. 

According to Dubroy, the McGill Lab test store is loaded with censors and AI that measures pupillary movement and how shoppers physically move, providing valuable insights regarding, for example, for how future stores are laid out. Among its finding are that 27% of Couche-Tard visitors immediately go to ice cream section.

Convenience, Dubroy says, remains a key part of the shopper marketing toolbox as a last mile linkup to these kinds of retailers vast networks, but also discount couponers like Reebee or Checkout 51.